ASSIGNMENT OF A CLAIM

ECOVIS Miskinis, Kvainauskas ir partneriai advokatu konotra

Assignment of a claim is an important and convenient business performance measure. By claim assignment contract, a creditor may assign the claim to another person and, in such case, the creditor of a claim changes, but the debtor remains the same.

This article shall disclose important questions related to the assignment of the claim: debtor consent, form of contract, obligations and liability of the previous creditor, new creditor and debtor.

According to the Civil code of the Republic of Lithuania, a creditor may, without the consent of the debtor, assign to another person all, or a part, of the claim provided that the transfer does not contradict the laws or the contract, or the claim is not related with the person of the creditor. It is possible to assign even a future claim, but the assignment of the claim may not infringe on the rights of the debtor and render his obligation more onerous. It follows from this provision that, generally the consent of the debtor is not necessary and the creditor is free to assign his claim to a third party, but this right is not absolute and can be restricted by laws or the contract. Nothing prevents the parties from including a clause under which the creditor loses the right to assign a claim to a third party. Moreover, it is not allowed to assign the claim related with the person of the creditor without the consent of a debtor.

Besides these mentioned restrictions, it is also forbidden to assign the claim in these cases:

1) to assign the claim against which recourse cannot be taken;

2) to assign the claim to the judges, public prosecutors and advocates who exercise their functions in the litigation which arose because of this claim;

3) to assign a claim inseparably related with the person of the creditor (claim for maintenance, claim for compensation of damage caused by impairment of health or loss of life);

4) to assign a part of a claim if the obligation is undivided.

Another important requirement for the claim assignment contract is the form of a contract. Under the Civil Code it is determined that formation of a contract upon assignment of a claim shall be subject to the same formalities as prescribed for the principal obligation. If the claim arises from the contract, which shall be made in ordinary written form, the claim assignment contract shall also be made at least in ordinary written form (it also shall be made in notary form). In the above-mentioned conditions, the claim assignment contract shall be considered as valid.

It is important to mention not only requirements for the claim assignment contract, but also the rights and obligations of the previous creditor, new creditor and the debtor. The previous creditor shall be liable towards the new creditor for the invalidity of the assigned claim, though he shall not be liable for the debtor’s non-performance of the obligation arising from this claim, except in the cases when the previous creditor gives a surety to the new creditor for the debtor. The previous creditor shall be bound to hand over to the new creditor the documentary evidence pertaining to the claim and the accessory rights, including the right to receive interest. If such documents remain of importance to the previous creditor, the new creditor shall only be entitled to copies thereof, confirmed within the established order.

The fact of the assignment of the claim may be invoked against third persons and the debtor from the moment when the debtor acquiesced in it, or received a copy of the document confirming the fact of the assignment of the claim, or any other evidence of the fact of the assignment of the claim. Where the place of the debtor’s whereabouts is unknown, the assignment of the claim may be announced by public notice.

The debtor shall have the right to set up against the new creditor all the defenses which he was entitled to set up against the previous creditor at the time of receiving the notice about the assignment of the claim.